In this episode of RETHINK RETAIL we dive into recent ecommerce trends and explore how consumers are reinventing expectations. You hear from special guest Veronika Sonsev, a Forbes contributor and Retail Practice Lead at Chameleon Collective. See full transcript below.

Episode

1

of RETHINK Retail was recorded on

June 6, 2018

TRANSCRIPTION

Paul Lewis:

Okay, welcome to the show.
I'm your host Paul Lewis and today's guest is Veronica Sonsev. Veronica is a well-known
retail and eCommerce expert, who holds an MBA from Morton. She's a Forbes
contributor and has interviewed on NPR, Wall Street Journal, Tech Crunch, and
now on Rethink Retail. So Veronica, tell me a little bit about your background
and current role leading the retail practice at Chameleon Collective.

Veronica Sonsev:

First of all Paul, thank you for
having me on the podcast, it's a pleasure to be here with you today. So I've
been in the retail industry for years, and have had the opportunity to work
with some of the largest retailers in the world. Today I lead the retail
practice for Chameleon Collective. Chameleon Collective is a growth and
innovation consultancy. Our retail practice has two parts, we work with B to C
Retailers, as well as B to B Technology Vendors. The B to C part of our retail
practice focuses on marketing and eCommerce operations primarily as well as
innovation work. And the B to B part of our business focuses on marketing and
business development for the technology companies that are trying to get into,
and work with retailers.

Paul Lewis:

Awesome. Well it sounds like
a very diverse practice. I also know your deeply involved with the Commerce
Next summit that's coming up. Can you tell me a little bit about what Commerce
Next is, and when that will be?

Veronica Sonsev:

Yeah, absolutely. Thank you for asking
about that. So Commerce Next is a conference that is taking place in New York
City on July 25th and 26th. Our focus is on customer acquisitions for retail
and eCommerce. The reason that we founded this conference is because we think
that marketing is key for success in retail and eCommerce. There are a lot of
conferences out there that focus on technology and deception and Omni Channel.
We think that one of the factors that is going to determine the success or
failure of retail eCommerce companies is their ability to be able to
successfully and effectively acquire customers, and we created a forearm for an
executive conversation around that topic.

Paul Lewis:

Awesome. Yeah I think that
customer acquisition in the modern age is a more complex and involved topic
than it ever has been before. And there's probably no area that has been more
affected recently than the brick and mortar stores. How do you see the state of
the current retail industry and how that ties back into brick and mortar?

Veronica Sonsev:

That's a great question. I think the
whole retail industry is transforming right before our eyes, it's kind of
great. I've been working on it for a while, I've been seeing it evolve you see it
most prominently in the physical stores. There's been tens of thousands of
stores that have closed over the last five years. Just last year alone we had
6,700 store closures. Stores being in this case doors, so a lot of these came
from large chains that closed a number of doors all at the same time.

Veronica Sonsev:

Last year we had the biggest number of
closures ever in history in the U.S., and there's two reasons why that's
happened. Part of it is the digitization of retail, so more and more of the purchases
are moving online. But part of it is the U.S. is over scored, one of the
interesting statistics that I read is that the U.S. has twice as many stores,
twice as many square feet of retail space per person than the next country,
which is Australia. And we have five times the square feet of retail per person
than Europe. So it's pretty amazing that we've managed to keep so many doors
open for so long. I think as more and more moves into eCommerce it's just
shifting consumer spending and behavior.

Veronica Sonsev:

The other interesting thing that's
happening with stores, because you can buy so conveniently online, because
delivery is so quick, because the selection is almost infinite if a consumer is
going to go into a store I think it's important for retailers to have, to give
them a reason to be there. Whether that reason is to service a product that
they have, to try on something, to be able to touch and feel and learn in a
more tactile way about the products. That experience has to be first and foremost,
and I think if you look at the history of stores their primary function was
selling products, and part of that was experiencing with ultimately there was
the place where you would get the products.

Veronica Sonsev:

Now that you can get products with the
click of a mouse or a swipe of a finger, they really have to be more creative
about how they're engaging with customers. And one of the things that I think
is really interesting about this space, in addition to the fact that your
seeing foreclosures from large retailers like Toys R Us and Claire’s, I mean so
many companies have announced bankruptcies in recent years at the same time you’re
seeing digital farce retailers open up stores and part of that it's not that
stores are bad, stores are a key part of the marketing mix but I think one of
the challenges and opportunities at the same time is to rethink what a store is
and how it plays into the whole experience. And that's what I think the
industry is going through right now.

Paul Lewis:

Yeah, absolutely. I love how
you highlight it's so important to create an experience, whether that is
online, where there is of course with a click of a mouse, so much competition
of where you can go to buy products. Or whether it's in the store you have to
create a reason that gets people out from behind the computer and want to come
into the store, there has to be added value and there has to be an experience
that consumers enjoy.

Veronica Sonsev:

Yeah, and retailers are doing some
really, the smart ones, the ones who understand that are getting ahead of the
game are doing some really interesting things. You see stores like Ulta, who
provide beauty services in store. You have DSW, doing shoe repair, and
pedicures and manicures, which makes total sense. You see Nordstrom providing
alterations and try on experiences, so it's definitely resonating with people
and you see a lot of really great examples of retailers have been embracing it.
But right now I think those are still in the minority and more, and more are
starting to think through and reimagine what that experience is in this new
digital first world.

Paul Lewis:

No, that makes sense, and as
you mentioned there are these opportunities to really change the in-store
experience and to make it exceptional. What do you think are some of the top
challenges that retailers face, as well as what are the opportunities where
they could really grab market share now?

Veronica Sonsev:

Challenges and opportunities. So let's
start with the challenges, cause I think the most obvious one is the fact that
eCommerce and more importantly, Amazon, which is by far the biggest player in
the eCommerce space is really changing how consumers shop. So your seeing
category by category, more and more transactions happening online. And so that
is shifting, that shopping behavior is shifting and that creates challenges for
people who have traditionally been set up to sell products to stores. And
retailers are adapting and learning from that process.

Veronica Sonsev:

The other thing is what I mentioned before,
the fact that we're over stored and our foot print, our retail footprint is so
back, there needs to be a right sizing. And the way that were shopping is also
changing, your seeing more and more shopping that's happening through shopping
centers, through conveniently near your home, and less through malls. As
consumers are spending less time, less of their free time in malls compared to
how they used to shop. So I think those are some of the underlying challenges,
now there are a ton of opportunities for retailers that are willing to innovate
and really invest in technology. I think one of the key areas of opportunity is
personalization. Now, we've been talking about personalization for a long time
and I always, yeah know, when I bring up personalization I kind of smile
because it's not a binary thing, it's not like you have personalization or you
don't have personalization. It's something that is an ever evolving challenge
or opportunity to take on, so you may start with a website personalization, then
you need to do marketing personalization both in terms of how you acquire a
customers, and how you do retention marketing.

Veronica Sonsev:

And as technology gets better and
things get more and more automated you start moving toward more narrow segments
of personalization. So maybe at first your personalizing, so it's very broad
segments, like gender interests, family, singles those kinds of things. Over
time your personalizing it to their individual specific interests and that's
all coming, and retailers are constantly trying to get better and better at it.
So it's still very much relevant for them.

Veronica Sonsev:

Unified Commerce or what we used to
call Omni Channel Commerce I think have a huge opportunity. We've been talking
about Omni Channel also for a really long time, but if you really think about
it, besides implementing buy on line, pick up in store there's not a lot that's
been done that's really moved the needle when it comes to Unified Commerce. And
I think part of the challenge, and a few people are doing it really well, Aldo
has actually made some huge strides when it comes to Unified Commerce and
finding ways to connect online and in store experiences in an organic way, then
let's the customer have a better experience and for a company like Aldo let's
them see how the customers are interacting with them across all of the
different channels that they're servicing them.

Veronica Sonsev:

So, for example one of the things that
they're doing is when you’re in store, you can use the Aldo app and you can
request your shoe size right there. So you just scan the shoe, request the size
they come and bring it to you. You can of course go to a sales person, but you
can also service yourself. They're letting you say things for them, so you can
then pick them up in store and try them on. If you’re in store and you’re
trying on a shoe but you’re not sure if you want to make the purchase they let
you favor it so you can go and buy it when your home. All of these things are
ways they are starting to connect the user experience, but they’re not doing it
in a scary, creepy way. They're doing it all from the perspective of how do I
make it better for my consumer to have an experience that really services what
they need. And at the same time they're collecting a tremendous amount of
information about how their consumers are shopping with them across all these
platforms.

Veronica Sonsev:

Another big opportunity for the
consumer experience I think, Amazon first and foremost has a great consumer
experience, but all of these digital first companies like Le Fiet, Fish Sticks,
Ruby Parker, they're all innovating and really perfecting that consumer
experience. And then that's starting to become the new normal. So it's
everything from how easy is it for you to check out of my site, to how easy is
it for me to track my package, to process a return or exchange, to ask
questions all of those things play into the consumer experience equation and in
fact retailers are thinking about all the different ways they can optimize it.
Because it's not just about the sale, it's about that net promoter score. It's
about that referral that the customer is going to give you because he's
delighted and exceeded their expectations.

Veronica Sonsev:

And I would say the fourth area that
is really important is loyalty. Part of loyalty is delivering on a great
consumer experience. But loyalty also is about what is going to give the consumer
a reason to come back. So obviously if they had a great experience they're
going to come back, but how else are you keeping that relationship alive, how
do you stay top of line. If you’re a beauty company, are there beauty tips that
you can offer your consumers based on the products that they bought to keep you
in their top of mind. Are there ways you can engage with your consumers that
makes them feel like they are part of a community, make them feel like they're
being heard, make them feel like they're being serviced. I mean that's, those
are all part of pride and loyalty, as well as things like points of promotion
that encourage frequent purchases from the retailer.

Paul Lewis:

That makes sense. A lot of
things that you've mentioned, personalization, Omni Channel, improving the user
experience, loyalty programs are things we've been talking about for a while,
but they really seem to be getting to that next level of adoption now, and I
wonder if the reason for that is that the brands, the marketers were struggling
to put together those solutions they didn't really completely understand how to
use them, how to do them effectively. Or if it was that the technology to
stitch all of that together was a little bit cluegy in the past and we finally
got that running like a well-oiled machine now, and so it's possible to do it.
What was it the consumers really weren't ready or on board or appreciative of
those features yet, and we've just become more sophisticated as consumers, or
is it a combination of all three of those things? What do you think is driving
the current adoption of all those areas you mentioned?

Veronica Sonsev:

I actually think consumers are ahead
of the curve, the consumers are ready. When you survey consumers they want more
personalized experiences, they want them personalized in store in addition to
online. Of course they want great customer experience, who doesn't want to be
delighted by the retailers that service them. I think the challenge has been a
combination of the technology, like you said. There's great technology out
there but I always feel kind of hesitant cause there's no out of the box
solution. Even a quote, unquote out of the box solution needs to be customized
and managed and someone has to look at the results and tweak it. Because in the
end AI is great, but you need a human to kind of make a decision, train, and
configure the solution to some of that. So the technology has gotten much
better, and there's less need for perfect spoke solutions and I think there's
vendors out there that can really help retailers and eCommerce companies
accomplish personalization, loyalty, consumer experiences. All of those things
can Omni Channel there are vendors that make it much easier for them.

Paul Lewis:

So who's doing this right?
Who is really doing a good job of staying relevant and keeping up with these
trends and capitalizing on these kinds of opportunities, or agily reacting to
the challenges?

Veronica Sonsev:

There are a lot of people who are
doing it right. Some great examples that come to mind for me are Nike, I think
what Nike has done is pretty amazing. They're one of the few brands that really
has a direct consumer relationship. And they've been really smart about how
they've built it. So Nike has apps that are relevant to almost every customer
or web they serve, so for example they have they Nike Running Club app for
runners. So the people who use that app they know what time they run, they know
what the weather is at that time because they know where they are. That app not
only has, tracks their time and their speed, it tracks their route, so they
have all of this information and then they use that to market to those
consumers. So if they've been running a lot, they might suggest a new pair of
sneakers, if their running at night they might suggest clothes with reflectors.
So they're taking that information and they're using it for marketing.

Veronica Sonsev:

Nike also knows that they have the
casual customer who is more like a sneaker head, collects sneakers and is
really into the fashion side of that market. And they have the Sneaker
SnapChat, which this is really cool. Essentially they will find these limited
edition release of sneakers, so for you to be able for you to get access to the
limited edition sneakers that are coming out you have to be at a certain
physical place to unlock that opportunity to purchase them. And so they're
getting crazy adoption of this app and it also then now giving them a way to
segment and market and develop direct relationships with these sneaker heads
that are buying a lot of sneakers, at high prices, standing in long lines, very
very loyal customers. So thinking about these ways of how can I service my
consumer but at the same time collect information about them so that I can
better market and service them on down the road, that's really key and I think
that key crushes it from that prospective.

Veronica Sonsev:

From a consumer experience prospective
I would say Nest. We just got to determine where outfitting it with all of the
smart home stuff and when you install Nest, you scan the QR code you can figure
it, they have all the steps and videos and everything right in the app. Super,
super easy. The website provides all the information you need, very good at
FAQs. They've built a network of pros to help install their products, all of
their products talk to each other. I don't know how much you've done smart home
stuff, but we've installed other providers for things like light bulbs, and
locks. Wow, it's like a dramatic difference in the experience, so much easier
with the way that Nest sets it up. But I think that's the standard. When you've
used Nest, everything else seems so complicated.

Veronica Sonsev:

And I would say from the four
prospective, cause I think four is super important as part of the equation even
though their role is changing. I would say Ulta, the way that they've been able
to grow their big box footprint, their store sales, quarter over quarter, year
over year continue to grow. Part of that is because they offer services, people
have a reason to go to Ulta. They can get a haircut, a facial in addition to
the fact that they have an incredibly comprehensive selection of products
available there. So the fact that they're combining this experience with
shopping is a huge win for them and it's showing up in their results every
quarter.

Paul Lewis:

So some of the takeaways I
hear is it's important to know your audience, to personalize like Nike is
doing. Whether it's their sneaker aficionados or whether it's the general
public that there's different experiences and ways of connecting. It's
important to make whatever those experience are very easy, look at what Nest is
doing to really set the bar on ease of setting up and using their products. And
then carrying that across your brand, whether that is online or in store, like
Ulta setting up these really great in store experiences.

Paul Lewis:

What do you think
are some of the big technology impacts, obviously technology is moving at a
phonetic pace these days and each technology wave gets another wave after it.
What are some of the big things that are impacting the industry now when you’re
working with retailers today?

Veronica Sonsev:

The part about personalization, I want
to kind of put that one aside to some of the other things that are really
important. First of all AI is making retailers jobs easier and harder at the
same time. So a lot of the functions, whether it's personal relations and
segmenting your customer base or whether it is actually optimizing your media
campaigns. A lot of that can be done using AI but it's creating a loading curve
for people who are not used to necessarily leveraging that technology learning
curve to making sure the technology has the right assets used for
example, if your using it to market a campaign. That's something you see, and
sometimes it almost feels like an arms race. Whatever is great this year,
becomes the new normal next year and there's something else that's great and so
part of it I think the challenge for retailers is to keep up with all these
technologies and see how their evolving and to figure out which ones they
should test, and which ones they shouldn't.

Veronica Sonsev:

I would say another thing that is
pretty dramatic shift in the industry is logistics, and logistics are not sexy.
It's the back of the house, but the consumer side of it means that they can get
their products faster. They know if their products are in the store before they
get there. If it's done right it can so dramatically improve the customer
experience, and I think one of the things that we're seeing, again like
anything Amazon does today becomes a new normal tomorrow. So, Amazon introduced
two day shipping, now if you have product that you have to wait more than two
days for, you're just kind of baffled that why it's taking so long to get
there, and then with Amazon Now and Google Express you can get products even
the same day. All of these things, it's only going to get faster, only going to
get more on demand. And so, I think retail has to be prepared for that, they
have to be ready to service those customers they send those expectations.

Paul Lewis:

No, that makes sense. It is a
challenge. I imagine it's one of the reasons that retailers are changing some
of their team members, and why they're working with external partners to help
them understand and adopt this very fast pace of change and get the right
technologies in place.

Veronica Sonsev:

Absolutely, I mean they're
retrofitting their warehouses to accommodate some of these things.

Paul Lewis:

What about flipping some of
this around though, we've been talking a lot about retailers and what they need
to do. What are some of the trends you've noticed in consumers, you mentioned
how they're almost leading the way in their expectations of the retail
industry?

Veronica Sonsev:

I think what your seeing, the best
retailers do is react to those expectations. And so a lot of the things we
talked about you just gotta look at it from the flip side. So for example,
consumer experience, Amazon keeps raising the bar for consumer experience time
and time again and then that becomes the new normal. So they want free
shipping, they want free returns, they want their products to come fast. Those
are all behaviors that Amazon has trained us to want because we get that with
them. They also really want things personalized to them, I mean this is
partially why personalization is such a big important priority for retail. When
you survey consumers they want the retailer to offer them products that are
relative to them. You are not going to get a pass for sending a sale that has
every single product to a customer, if they only buy women's products they
don't want to see the men's products, they want the offers personalized to
them.

Veronica Sonsev:

And one of the things we also heard is
that they also want that experience personalized in store, so if a consumer has
looked for a certain product online, has done the research they walk in the
store, they want you to have that product, they want you to know that they want
that product. They want you to help them. They want you to be educated about
the benefits of the product. There's nothing more frustrating for consumers
than they do all this research online and they come in to kind of do that final
kick the tires, and the sales person that's there has no idea and can't really
offer any more information about the product they are trying to buy. That's
incredibly frustrating. And by the way, that kind of brings forth all of the
tablet and store based applications that retailers are starting to put the
sales people with so they can be as knowledgeable as any consumer that walks in
the door about any product that's in the store.

Veronica Sonsev:

I would say the other thing is they
want things fast, and they want things when they want them. When you walk down
the streets in New York, I live in New York, the stores are open as late into
the night, you can get a burger or a slice of pizza almost any time of the day.
And consumers are getting used to this on demand world, and they want that for
shopping, so whether it's ordering their groceries and having them delivered in
a matter of a couple of hours or whatever product they want, vending machines.
Being able to kind of go and grab the product in a convenient location, all of
these things are driving some of these innovations that retailers are opening
the market.

Paul Lewis:

Well Veronica, it's been
great having you on the show and hearing all these prospectives. Not to put you
on the spot, but maybe as a last question, where do you see things going say
over the next five years? What are the things that people really need to keep
top of mind, that are sort of up and coming?

Veronica Sonsev:

Things from top of mind of up and
coming. I mean, I think your going to see more and more ... we talked about
logistics so I think your going to see more and more same day delivery, even
faster within an hour, within a matter of a couple of hours. You're already
seeing that and I think it's just going to become more and more the new normal.
I think you are going to get to at true Unified Commerce experience, I see that
retailers are figuring it out and I think even with things like GDPR protecting
consumer privacy, I think if retailers figure out how they can deliver and
amazing customer experience than consumers will opt in and you'll be able to
understand how online, in store relates. And then not only that but deliver
like personalized experience when hey walk in the store. "Hey, welcome
back Paul. It's great to see you. I know last time you bought these sneakers
would you like to get another pair of sneakers or are you looking for something
else to buy that goes with them?" That kind of experience is going to be
real and sooner that we can imagine.

Veronica Sonsev:

I think killer consumer experiences
are going to become the new normal, I think retailers that can't deliver on a
great consumer experience are just going to go away. And the retailers that can
will be the ones that have the crazy customer loyalty that keeps generating
business. And then we didn't talk about this as much earlier but I do think
it's a really important point. I think new brands will rise and I think some of
the old ones will fall. You see some of the new brands that are coming on the
market, Guacia in the beauty category, Ruby Parker in the glasses category,
there's a number of fashion brands that are coming on the market. All of those
companies, it's not just that they're bringing new products, they're creating
new experiences and those new experiences are delighting their customers, have
incredible word of mouth and I think in the end if the traditional brands are
not keeping up they're going to become less relevant and these new brands are going
to dominate the industry.

Veronica Sonsev:

And you see that, not that Victoria
Secret is going away, but you see that with brands like Third Love coming into
the lingerie industry, and really kind of crushing it from an eCommerce
perspective. And it's starting to make an impact on a company like Victoria
Secret, for example. I think there's going to be winners and losers in the
world of brands and it will be interesting to see who adapts and is still
around and who doesn't and who is no longer part of the equation. But it's going
to be exciting. There's a lot of change happening, and I'm looking forward to
seeing it.

Paul Lewis:

Yeah, absolutely. I think
that, I did see a quote that "We'll see more changes over the next five
years than over the past 25 years with retail." So I think that that's
true, not only with retail but probably a lot of fields. In any case, it has
been wonderful having you on the show. Thanks for sharing your insights, it's
always amazing when I listen to you, you have so much knowledge of what
different brands are doing, how they're approaching the markets, being able to
compare and contrast that so it's great to get that wisdom form you. If people
want to learn more about you they would go to Chameleon Collective, is that
right?

Veronica Sonsev:

Yeah, they can go to Chameleon Collective
they can follow me on Twitter a vSonsev, I'm pretty accessible on all social
networks.

Paul Lewis:

Awesome, well great. Well
again, thanks for joining the show today and thanks for again sharing your
thoughts and insights.